New Delhi, March 10 Fitch Ratings has affirmed Adani Energy Solutions Limited's (AESL) long-term foreign and local-currency issuer default ratings (IDRs) at 'BBB-', removing the company from 'Rating Watch Negative' list.
Fitch has affirmed the ratings as the Adani Group has demonstrated adequate funding.
"We believe the risks associated with the group's liquidity and funding requirements have moderated,” said the global ratings agency.
AESL has demonstrated adequate funding access since the US action, having drawn Rs 51 billion from onshore and offshore banking facilities.
The group company, AGEL, has also raised onshore funding to refinance its $1.1 billion construction-linked facility, which was due in March 2025.
According to the Fitch note, AESL's transmission segment revenue, under both the cost-plus and tariff-based competitive bidding (TBCB) frameworks, is based on system availability and "is not exposed to volume risk".
The low operating risk profile of transmission assets and AESL's strong operating performance provide "long-term revenue visibility".
"AESL had high asset availability of around 99.7 per cent in the first nine months of the financial year ending March 2025 (9MFY25), similar to FY24 levels and well above regulatory benchmarks," said the international ratings agency.
AESL's credit profile benefits from India's stable and favourable regulatory environment.
"We expect revenue for its transmission assets to continue contributing a large majority of EBITDA in the medium term, even as the contribution from its smart metering business increases," said the report.
"We forecast capex to increase significantly to Rs 175 billion a year in FY25 and FY26 (FY24: Rs 40 billion), driven by transmission projects under construction and the smart metering business. AESL has won a bid to install 22.8 million smart meters across five Indian states, under a design, build, finance, own, operate and transfer structure," the note read.
Last month, global brokerage Elara Capital initiated coverage on Adani Energy Solutions Ltd (AESL) with a 'BUY' rating and a share price target of Rs 930 -- implying a 37 per cent potential upside from the current market price.
Adani Energy Solutions is set to post robust growth in its transmission, distribution, and smart meters businesses. Transmission EBITDA is likely to double to Rs 76 billion by FY27E, driven by India's renewable energy (RE) target, 20-25 per cent market share in Rs 840 billion near-term transmission bid and a Rs 548 billion project pipeline, said the Elara note.
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